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Cite as: [2016] 2 All ER (Comm) 711, [2016] WLR(D) 302, [2016] 3 WLR 357, [2016] EWHC 970 (Ch), [2018] Ch 297

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		Neutral Citation Number: [2016] EWHC 970 (Ch)
		Case No: HC2015003369

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL

29/04/2016

B e f o r e :

THE HONOURABLE MR JUSTICE NUGEE
____________________

Between:

	(1) Mark Alan Holyoake (2) Hotblack Holdings Limited	Claimants
	- and -
	(1) Nicholas Anthony Christopher Candy (2) Christian Peter Candy (3) Richard Steven Williams (4) Steven Miles Smith (5) Timothy James Dean (6) CPC Group Limited	Defendants

____________________

Anthony Trace QC and Richard Fowler (instructed by gunnercooke LLP) for the Claimants
Ewan McQuater QC, Adam Kramer and Alexander Polley (instructed by Gowling WLG (UK) LLP) for the Defendants

Hearing dates: 7th & 8th April 2016
____________________

HTML VERSION OF JUDGMENT
____________________

Mr Justice Nugee:

Introduction

On 7 and 8 April 2016 I heard an application for an interlocutory injunction brought by the Claimants against three of the Defendants in this action, namely the First, Second and Sixth Defendants ("the Defendants"). As issued, the application sought to restrain them from disposing, dealing or otherwise engaging in transactions with their assets in the sum of or to the value of more than £1m without first giving the Claimants' solicitors 7 days advance notice in writing. As appears below, by the end of the hearing the relief sought had been significantly modified. I had previously indicated that I hoped to be able to give the parties at least the answer straight away, and in the event when argument finished on the afternoon of 8 April 2016 I indicated that I was satisfied that it was an appropriate case for some relief to be granted, but in the light of the late change to the nature of the relief sought I would adjourn the application for further evidence to be filed, granting a temporary injunction in the meantime. I gave my views on various matters which had been argued before me quite briefly and this judgment is intended to set out my reasons for the views which I then expressed.

Background

I can take the background from a judgment delivered by Arnold J on 7 September 2015 when he refused an application by the Claimants for expedition. He said as follows:-

"1 The first claimant, Mr. Mark Holyoake, claims to be a successful businessman with a background in property development in the food industry. The second claimant, Hotblack Holdings Ltd, is a Jersey registered company with a BVI parent, ultimately owned by Mr. Holyoake.

2 In 2011, the claimants were seeking to purchase a substantial and valuable property in Grosvenor Gardens in order to develop it. They say they were expecting to make profits of more than £100 million by this venture. In October 2011, Mr. Holyoake approached the first defendant, Mr. Nicholas Candy, the well-known property developer and thought by Mr. Holyoake to be an old friend, for a loan of some £12 million required at 24 hours' notice to help complete the purchase and proceed with the redevelopment. A loan of £12 million under a written loan agreement was duly made to Mr. Holyoake by the sixth defendant, CPC Group Ltd ("CPC"), with a term of two years.

3 CPC is a Guernsey registered company which appears to be ultimately owned, or at least controlled, by Nicholas Candy and his brother, the second defendant, Mr. Christian Candy. The third, fourth and fifth defendants, Mr. Richard Williams, Mr. Steven Smith and Mr. Timothy Dean were directors of CPC at the material times.

4 It is the claimants' claim that thereafter Mr. Holyoake was subjected to a long-running, highly unpleasant and vitriolic campaign of threats, abuse, intimidation and coercion directed at himself and his family by the defendants. The claimants say that Mr. Holyoake was bullied and coerced into entering into a long series of further agreements with CPC and into procuring that Hotblack enter into certain of these agreements. The claimants say that these agreements were highly disadvantageous to them and highly advantageous to CPC. In the result, so the claimants say, Hotblack was eventually forced to sell the property in question at a loss in February 2014 and Mr. Holyoake was forced to pay a total of more than £37 million to CPC for his initial loan of £12 million. Accordingly, the claimants made no profit from the venture. On the contrary, they made a loss.

5 The claimants say that they have been the victims of a conspiracy on the part of the defendants. The conspiracy is categorised as an unlawful means conspiracy in which the unlawful means relied on are as follows: first, fraudulent misrepresentation; secondly, duress; thirdly, actual undue influence; fourthly, intimidation; fifthly, unlawful interference with business/economic interests; sixthly, extortion under colour of due process; seventhly, extortion simpliciter; and lastly, blackmail. The claimants also bring freestanding claims under the first six of those heads together with a claim for relief under s.140(a) and (b) of the Consumer Credit Act 1974.

6 The claimants' claim has been pleaded in extensive particulars of claim that run to no fewer than 208 paragraphs and, as counsel for the claimants fairly points out, are detailed and well particularised, at any rate at first blush. The claimants value their claims at in excess of £132 million, excluding aggravated or exemplary damages which they also seek.

7 Unsurprisingly, the defendants' perspective on these matters is rather different. At this stage, the defendants have yet to file their defences, but counsel for the defendants submits as follows in his skeleton argument. First, that on his own account Mr. Holyoake was a wealthy and experienced businessman. He claims to be worth in excess of £100 million. At all material times, he acted with the benefit of a raft of advisers, including investment professionals and sophisticated commercial lawyers. He was not an innocent in such matters, it is said.

8 Secondly, it is alleged that Mr. Holyoake defaulted on the loan from day one and that the resulting further security and loan extensions entered into by Mr. Holyoake were agreed by him in order to stave off enforcement and so that he could continue to pursue the huge profits which he anticipated making from the development.

9 Thirdly, it is alleged that Mr. Holyoake expressly acknowledged his default at the time. Now, he wishes to paint a different position, but it is contended by the defendants that the reality was as he acknowledged at the time, namely that he was in default. In any event, the defendants contend that it is sufficient for their purposes that they genuinely believed him to be in default, which they say they plainly did.

10 Fourthly - and this is a matter that is particularly germane to the present application - it is pointed out that Mr. Holyoake initially raised his complaints against CPC back in August 2013 and that led to a compromise of the dispute between Mr. Holyoake and CPC in a settlement deed dated 15 October 2013. The defendants say, moreover, that Mr. Holyoake affirmed that agreement on subsequent occasions.

11 Is it is plainly not possible or appropriate for me to express any view whatsoever as to the merits of these rival claims and counterclaims. It is sufficient at this stage for me to proceed on the basis that there is here a substantial claim made in particulars of claim which are lengthy and detailed and that there will no doubt be an equally lengthy and detailed defence."

Since Arnold J's judgment the Defendants have filed a lengthy and detailed Defence which in summary not only relies on the Claimants having settled any claims which they might have had by the October 2013 Settlement Deed but also alleges that Mr Holyoake lied about his assets and the imminence of refinancing funds; that he deliberately misrepresented or failed to disclose various specific matters; that he was in breach of the loan agreement, with the result that events of default occurred, from the inception of the loan; and that all CPC did was seek lawfully to recover the money lent to Mr Holyoake shortly after the loan was advanced. It is specifically denied in the Defence that any unlawful or inappropriate threats were made or any threats of violence. It is accepted that sometimes idioms, metaphors and swearing were used, but it is said that these did not prevent the relationship being open and fair nor did they amount to unlawful and inappropriate threats, and it is said that the allegations made as to fraudulent misrepresentation and threats bear no resemblance either to what happened or to what Mr Holyoake understood to be happening.

The Claimants have brought this application for an injunction because of concerns they have that the Defendants may make it difficult or impossible to enforce judgment against them if they are successful in the action. They have not however sought at this stage a freezing injunction; they have limited themselves to what might be called a "notification injunction" requiring the Defendants to notify them before disposing or dealing with their assets. As Mr Trace QC, who appears for the Claimants, put it, in doing so they contend that they are seeking no more relief than they consider reasonably necessary to protect their position, the primary purpose being that if the Defendants should attempt to enter into a transaction or transactions which the Claimants consider seriously damaging to their position, the Claimants will have the opportunity to apply to Court for a freezing injunction or take other steps to protect themselves.

Jurisdiction

Mr McQuater QC, who appeared for the Defendants, argued that a notification injunction of the type sought was contrary to principle, and I was referred, albeit briefly, to a large number of authorities on both sides on the question whether a freestanding notification injunction (that is one not ancillary to another order such as a freezing injunction) was in principle something the Court could do.

Mr Trace based his application squarely on s. 37 of the Senior Courts Act 1981, which reads:

"The High Court may by order (whether interlocutory or final) grant an injunction or appoint a receiver in all cases in which it appears to the Court to be just and convenient to do so"

His submissions rested on three propositions:

(1) The jurisdiction of the High Court under s. 37 was unfettered, and for this purpose he relied on what Lord Denning had said in Rasu Maritima SA v Perusahaan Pertambangan Minyak Dan Gas Bumi Negara [1978] 1 QB 644 at 660A where he said:

"…later decisions have made it clear that, when a statute gives a discretion, the Courts must not fetter it by rigid rules from which a Judge is never at liberty to depart."

(2) An order that could be made as ancillary to a freezing injunction may also be made as a freestanding order, referring to Maclaine Watson & Co Ltd v International Tin Council (No. 2) [1987] 1 WLR 1711 at 1716G-H per Millett J where he said:

"The ITC contend there is no jurisdiction to make such an order [an order for discovery of assets] in the absence of a Mareva injunction. It is, however, fallacious to reason from the fact that an order for discovery can be made as ancillary to a Mareva injunction to a conclusion that it cannot be made except as ancillary to such an injunction."

(3) A notification order is an order that can be made ancillary to a freezing injunction, and for this he referred to Lakatamia Shipping Co Ltd v Su [2014] EWCA Civ 636 where the judge had ordered a defendant to give the claimant notice of any proposed dealings with certain assets of non-defendant companies, and that was upheld by the Court of Appeal.

Mr McQuater took issue with each of these three propositions. He says:

(1) The power in section 37 must be exercised in accordance with established principle.

(2) Maclaine Watson was a post-judgment case and does not support the grant of a freestanding notification injunction pre-judgment.

(3) Lakatamia was a case where a freezing order had already been made.

Rather than discuss all the authorities put before me in turn, I propose to state my own understanding of the principles which apply:

(1) Although s. 37 is broad in its terms, it is fallacious to say that it is completely unfettered. This was established very soon after the Judicature Acts, as illustrated by one of the authorities cited by Mr Trace, Day v Brownrigg (1878) 10 Ch D 294. He cited it for the dictum by Sir George Jessel MR at 307 that "it must be "just" as well as "convenient" ", but it is apparent that what Sir George Jessel meant by that was that the Court could not grant an injunction whenever it seemed convenient but only in accordance with legal principle. In that case the Plaintiff complained that the Defendant, who lived in a house formerly called Ashford Villa, had recently changed the name of the house to Ashford Lodge, which for 60 years had been the name of the Plaintiff's adjoining house, and claimed an injunction to restrain the Defendant from continuing to use the name for his property. Malins V-C had refused a demurrer brought by the Defendant but the Court of Appeal allowed an appeal, holding that there was no legal right to the exclusive use of a name for a house, and that such a right is not known to the law. It was in that context that James LJ added a postscript to his judgment at 307 as follows:

"I think it right to add that the power given to the Court by sect. 25 sub-sect. 8, of the Judicature Act, 1873, to grant an injunction in all cases in which it shall appear to the Court to be "just or convenient" to do so, does not in the least alter the principles on which the Court should act".

It does not follow, as may have at one time been thought, that the Court's power under what is now s. 37 of the 1981 Act is limited to granting relief where it could have been granted before 1873: see Masri v Consolidated Contractors International (UK) Ltd (No.2) [2008] EWCA Civ 303 at [177] per Lawrence Collins LJ. If it had been, it is difficult to see that the Mareva injunction could ever have been developed; see at [181]-[183]. But it does not follow that the jurisdiction under s. 37 is completely unfettered; in the same case Lawrence Collins LJ says at [175] that:

"that does not mean that section 37(1) of the Supreme Court Act 1981 is to be taken as conferring an unfettered power"

and at [180], referring to the decision in Parker v Camden London Borough Council [1986] Ch 162, that:

"Browne-Wilkinson LJ agreed, at p 176, that the jurisdiction under section 37 to appoint a receiver was unlimited. But this decision is not a secure source of authority, since I doubt whether these dicta can stand with the rejection by the House of Lords in P v Liverpool Daily Post and Echo Newspapers plc [1991] 2 AC 370, 420-421 of similar statements by Lord Denning MR in Chief Constable of Kent v V [1983] QB 34, 42 in relation to the power to grant an injunction".

That statement by Lawrence Collins LJ was repeated by him as Lord Collins of Mapesbury in giving the opinion of the board of the Privy Council in Tasarruf Mevduati Sigorta Fonu v Merrill Lynch Bank and Trust Co (Cayman) Ltd [2011] UKPC 17 at [58].

(2) This judgment is not the place to examine the precise limits of the s. 37 power, something that (as appears from the cases referred to in Masri at [176]) is not yet settled at the Supreme Court level. What can be said is that in normal circumstances what is needed to persuade the Court to grant an injunction is a threat to do an act which constitutes an "invasion of a legal or equitable right" – see Maclaine Watson v ITC [1989] 1 Ch 286 at 303C per Kerr LJ, referring to what Lord Diplock had said in the Siskina case [1979] AC 210 at 256D and repeated by him in British Airways Board v Laker Airways Ltd [1985] AC 58 at 81B, and by Lord Brandon in South Carolina Insurance Co v Assurantie Maatschappij "De Zeven Provincien" NV [1987] AC 24 at 40C. The phrase itself can be traced back to the judgment of James LJ in Day v Brownrigg, where he said at 305:

"It appears to me there is no damage alleged, there is no legal right alleged, the violation of which was the cause of damage. That being so, it is not for this Court to say that because somebody is doing something which it thinks not quite right, a thing which ought not to be done by one person to another, it should interfere. This Court can only interfere where there is an invasion of a legal or equitable right."

Alternatively one can speak of a breach of an obligation owed to a claimant: see Maclaine Watson at [1989] 1 Ch 286 at 303D-E.

(3) Leaving aside the special case of a freezing injunction therefore, a claimant who seeks an injunction restraining a defendant from dealing with an asset will normally have to assert that such a dealing will be an invasion of some right of his, or a breach of some obligation owed to him. This may be for example because he asserts some proprietary right to the asset (for example a tracing claim) or because the defendant has contracted not to dispose of it, or, to take another example, because the defendant is under an obligation to dispose of it at a proper price and is threatening to dispose of it at what is asserted to be an undervalue. In all such cases there is ample jurisdiction conferred by s. 37 to restrain the threatened disposal.

(4) In such a case there is no reason why the Court cannot, instead of granting an injunction restraining the disposal altogether, grant a notification injunction, that is an injunction restraining the defendant from disposing of the asset without having given the claimant prior notice. That is plainly a less invasive interference with the defendant's rights than a simple injunction restraining all disposal. If the Court can do the latter it can plainly do the former; indeed, I have personal experience of such injunctions being sought and granted and I strongly suspect that they are routinely asked for and granted without the jurisdiction to do so ever being queried.

(5) In the case of a freezing injunction, the basis for exercising jurisdiction is different. The purpose of granting a freezing injunction is to prevent dissipation of assets: see for example TTMI Ltd of England v ASM Shipping Ltd of India [2005] EWHC 2666 (Comm) at [26] per Christopher Clarke J. That I think can be reconciled with the proposition that an injunction can be granted under s. 37 where there is a threatened invasion of the claimant's rights by treating threatened dissipation as a threat to breach an obligation owed to a claimant. A debtor is not obliged to keep his assets intact to meet a possible claim by a claimant and can continue to spend them in the ordinary course of business or on his ordinary living expenses, but he is not at liberty to dissipate them so as to render a judgment unenforceable, or indeed to dissipate them if that would be the effect. In such a case the Court will grant a freezing injunction in accordance with what is by now a very well established jurisprudence. See for example the statement of principle in Halifax Plc v Chandler [2001] EWCA Civ 1750 at [16]-[20]. In other words, a defendant must be regarded as owing an obligation to a claimant not to dissipate his assets for the purpose of, or with the effect of, rendering any judgment that may be given liable to be one that goes unsatisfied. That does not seem a surprising conclusion.

(6) Just as in the case where a threat to dispose of an asset would amount to a breach of the claimant's substantive rights, it must follow that if the Court can grant a freezing injunction restraining disposal on the ground of dissipation, it is also able to grant a modified form of restraint which only restrains disposal if made without prior notification. I see no difficulty in principle with this provided it is indeed in a form which is less onerous than a freezing injunction. If a claimant satisfies the Court that there is a risk of dissipation such as would justify a freezing injunction, the Court can in my judgment grant a notification injunction. The purpose of doing so is the same, to restrain a threatened dissipation of assets in breach of the defendant's obligation not to dissipate assets for the purpose of, or with the effect of, leaving a judgment unsatisfied. To that extent there seems to me clearly power under s. 37 to grant a notification injunction even if a full-blown freezing injunction is not asked for.

(7) In the present case Mr Trace has squarely submitted that there are good grounds for fearing a risk of dissipation. I will have to consider if he is right, but if he is, I see no jurisdictional difficulties in granting a notification injunction.

(8) If however there is no risk of dissipation, it is not obvious to me that the Court does have power to grant a free-standing notification injunction. Absent dissipation, a defendant is free to deal with his own property. Nor is he obliged to disclose to a claimant what his assets are, or what he proposes to do with them. A person contemplating suing someone has no right to find out before commencing proceedings whether the defendant is worth suing, and I am very doubtful if, after suing, a claimant is in any better position. I accept therefore that a claimant cannot obtain an order requiring a defendant to disclose his assets to him, or tell him what he proposes to do with them, just because he is interested in the answer: compare Parker v CS Structured Credit Fund Ltd [2003] EWHC 391 (Ch) where Mr Gabriel Moss QC was dealing with CPR r. 25.1(1)(g) which refers to the power of the Court to grant "an order directing a party to provide information about the location of relevant property or assets or to provide information about relevant property or assets which are or may be the subject of an application for a freezing injunction" and where he said at [23]:

"looking, first of all, as a matter of construction, at the language used it seems to me that it is dealing with a situation where there is either an application for a freezing injunction on foot or one where it is at least likely that there will be such an application. In other words, the provision assumes there is some credible material on which such an application might be based."

That was approved by the Court of Appeal recently in one of the many Pugachev judgments, that is JSC Mezhdunarodniy Promyshlenniy Bank v Pugachev [2015] EWCA Civ 139 at [49]-[52] per Lewison LJ, along with the decision of Henderson J in Lichter v Rubin [2008] EWHC 450 (Ch). The present application is not in fact put by Mr Trace on the basis of CPR r. 25.1(1)(g), but if it had been, it appears from those authorities that it would require some "credible material" on which the application for a freezing injunction might be based or in the words of Henderson J "a reasonable possibility, based on credible evidence". If that is the case for CPR r. 25.1(1)(g), I find it difficult to accept that the Court could have achieved the same effect under s. 37 in the absence of a credible basis for a freezing injunction.

(9) What I think this demonstrates is that in practice in order to obtain an injunction of the type sought in this case the claimant must either assert some substantive right to prevent the defendant disposing of an asset – something that is not suggested here – or at least some credible evidence of a threatened dissipation such as would justify a freezing injunction; but if he can do that, I see no reason why the Court should not grant a notification injunction as a freestanding injunction even if the claimant, no doubt for good reasons, has chosen not to apply for a full freezing injunction.

What is the threshold test?

The next question that was argued was what the Claimants need to show so far as the merits of their substantive claims are concerned. There are actually two parts to this question:

(1) Is it enough, as Mr Trace submits, for the Claimants to demonstrate that there is a serious issue to be tried (as is the usual threshold test for the grant of any interlocutory injunction: see American Cyanamid Co v Ethicon Ltd [1975] AC 396 at 407G per Lord Diplock); or do the Claimants have to show a good arguable case (as is the case for a freezing injunction: see The Niedersachsen [1983] 1 WLR 1412 at 1417E per Kerr LJ)?

(2) If the test is a good arguable case, what does this mean?

On the first question Mr Trace says that there is authority that for the grant of a freezing injunction "a stronger case must be shown than would justify relief of a less stringent kind": per Millett LJ in Lewis v Freighthire Ltd (1 February 1996) cited by Warren J in Metropolitan Housing Trust Ltd v Taylor [2015] EWHC 2897 (Ch) at [21]. Since a notification injunction is less stringent than a freezing injunction Mr Trace submitted that it was enough if he could demonstrate a serious issue to be tried. I do not accept this submission. As I have already said, the claimant in a normal case has no right to know what the defendant's assets are or what he proposes to do with them. Although a notification injunction is in principle less invasive than a freezing injunction, it is still an invasive order and I think justifies more than a serious issue to be tried which, as appears from Lord Diplock's judgment in American Cyanamid, only really serves to cut out the frivolous or vexatious case. For the reasons I have already given the principles underlying the grant of a notification injunction are closely tied to the principles underlying the grant of a freezing injunction, and in my judgment what is needed to justify a freezing injunction in terms of the merits of the substantive claim is also needed to justify a notification injunction. I therefore hold that the Claimants need to demonstrate a good arguable case.

On the second question Mr McQuater cited a number of authorities. The position seems to me to be this. When the Mareva injunction was first developed, the Court of Appeal decided that the required threshold was "a good arguable case": see Rasu Maritima at 661G per Lord Denning MR. That phrase was taken from the test applied for service out of the jurisdiction: see Vitkovice Horni a Hutni Tezirstvo v Korner [1951] AC 869. In The Niedersachsen at first instance [1983] 2 Ll Rep 600, Mustill J explained what he understood by a good arguable case in this context as follows:

"In these circumstances I consider that the right course is to adopt the test of a good arguable case, in the sense of a case which is more than barely capable of serious argument, yet not necessarily one which the Judge believes to have a better than a 50 per cent chance of success."

In the Court of Appeal in the same case the Court of Appeal again accepted the test of a good arguable case as the minimum to cross the threshold, as already referred to. The Court of Appeal in their judgment expressed no disagreement with Mustill J's explanation of what that phrase meant in this context.

That was in 1983. In 1998 Waller LJ expanded on what a good arguable case meant in the context of service out of the jurisdiction in Canada Trust Co v Stolzenberg (No 2) [1998] 1 WLR 547 at 555, culminating in the statement that:

"It is also right to remember that the 'good arguable case' test, although obviously applicable to the ex parte stage, becomes of most significance at the inter partes stage where two arguments are being weighed in the interlocutory context which, as I have stressed, must not become a 'trial'. 'Good arguable case' reflects in that context that one side has a much better argument on the material available."

That was approved by the Privy Council in Bols Distilleries BV v Superior Yacht Services Ltd [2006] UKPC 45 at [28].

That leads Mr McQuater to submit that the same applies in an application for a freezing injunction. He has the support of Roth J in The Complete Retreats Liquidating Trust v Logue [2010] EWHC 1864 (Ch) at [72] ("there seems no basis not to apply that observation in the context of a freezing order"), followed by Mr Andrew Sutcliffe QC in OJSC TNK-BP Holding v Beppler & Jacobson Ltd [2012] EWHC 3286 (Ch) at [83]. He also referred to what Toulson J said in Petroleum Investment Co Ltd v Kantupan Holdings Co Ltd [2002] 1 AER (Comm) 124, but in fact that judgment is more nuanced than Mr McQuater's reliance on it might suggest. It is true that at [37] Toulson J said that the same concept as applied by Waller LJ in the Canada Trust case is "equally helpful when considering whether to make a freezing order", but at [38] he continued as follows:

"The limitations inherent in the interlocutory process may vary from case to case according to the subject matter. Where the subject matter involves questions of fact on which the evidence is incomplete and contradictory, it may be very difficult for a court to form even a preliminary view as to the parties' rival strengths. Reading Waller LJ's judgment as a whole, I do not understand him to be suggesting that in such a case the court has to be satisfied that the evidence on the claimant's side is stronger than the evidence on the defendant's side in order for the claimant to make out a good arguable case, for that would be in effect to apply the civil standard of proof, which he emphasised is not applicable at the interlocutory stage. However, where the claim depends on the construction of a contractual document on which there is detailed argument at the inter partes stage, a court may well reach a conclusion that one side has a much better argument than the other, although it must remember that the ultimate decision would belong to the court of trial or arbitral tribunal."

That I must confess chimes with my own instinctive inclination. When the question is one of construction or one of law, and there is argument on the point, the Court may well be able to take a view as to who appears, albeit at the interlocutory stage, to have the better, or indeed much the better, of the argument. Where however the merits of the case turn on questions of fact it would impose a severe limitation on the Court's ability to grant effective relief if it had to be satisfied that the Claimant had much the better of the factual case. That is very often impossible to say at the interlocutory stage where the issues are pure factual issues, particularly if the question turns on the credibility of witnesses.

Mr McQuater very properly referred me to the judgment of the Court of Appeal in Kazahkstan Kagazy plc v Arip [2014] EWCA Civ 381. Both Longmore LJ and Elias LJ expressed significant reservations about applying in the context of a freezing injunction the test of "much the better of the argument". Mr McQuater said that the Court of Appeal expressly did not decide the question so that this was obiter and not a decision, and no doubt he is technically right, but the judgments nevertheless contain powerful indications that Toulson J's views in the Petroleum Investment case and my instincts coincide with the views of two members of the Court of Appeal. Longmore LJ said at [25]:

"The second comment relates to the judge's decision that KK had "a much better argument" than Mr Arip. I would, with respect, say that this sets the hurdle a little too high. It was established in Pertamina [1978] QB 644 that the appropriate test to be met by a claimant seeking a freezing injunction was that of "good arguable case". We were not referred to any authority which has changed that test. "Much the better of the argument" has recently emerged as a test on applications for service out of the jurisdiction. But I see no reason why that test should apply to freezing injunctions where ex-hypothesi (or subject to any jurisdictional challenge) the defendant is properly before the court. But the fact that the Judge may have applied a slightly higher hurdle that he need have done does not in any way affect his conclusions."

Elias LJ at [63]-[68] expressed his own reservations as to the "much the better of the argument" test, referring to the traditional test laid down by Mustill J in The Niedersachsen and pointing out that that particular formulation was recently cited with approval by Longmore LJ in the Lakatamia case. He also said at [67]:

"although a claimant in both jurisdiction and freezing order cases must establish a "good arguable case", the policy considerations are different in the two situations and it is far from obvious that this inherently flexible concept must have the same meaning in each context."

In these circumstances I hold that I am free to follow Toulson J in the Petroleum Investment case and the indications in the Court of Appeal in the Kazakhstan case and that I am not obliged to follow Roth J and Mr Sutcliffe in applying the "much the better of the argument" test to the question whether a good arguable case has been shown on the merits. In the case of purely factual questions, I consider that it is sufficient for the claimant to meet the traditional test laid down by Mustill J in The Niedersachsen that the claimant needs to show a good arguable case in the sense of a case which is more than barely capable of serious argument, and yet not necessarily one which the judge believes to have a better than 50% chance of success. Indeed I would regard it as wholly invidious in a case of this type, which is likely to turn largely on the credibility of the principals on each side and their recollections of oral conversations, for a judge faced with nothing other than the pleaded cases and assertions that each side's pleaded case represents the truth, to have to form a view as to where the better of the argument on such issues might lie, let alone where much the better of the argument might lie. I find myself completely incapable, and indeed I would regard it as wholly inappropriate, to judge such matters on the basis of what are at this stage hotly disputed allegations on each side.

Has a good arguable case been shown?

The next question is whether the Claimants have shown a good arguable case on the merits. I can take this quite shortly. In my judgment they have. Since as I have just said all these matters are hotly disputed and since they will remain for trial, it is not I think either appropriate or necessary to go into the merits in any detail. Suffice it to say that the Particulars of Claim detail serious allegations starting effectively with the suggestion that Mr Holyoake was misled into agreeing to give a net asset statement to CPC by false statements that it would not be relied on, whereas in fact CPC immediately after the loan relied on deficiencies or alleged deficiencies in the net asset statement as breaches of the loan agreement making the entire sum repayable immediately, followed by a series of aggressive threats of an unpleasant and wholly unjustifiable character. Of course that is only so if Mr Holyoake's allegations are true, and the Defendants have pleaded a detailed refutation of the allegations in the Defence, but the question whether Mr Holyoake's allegations (supported by a statement of truth given by him) are true or not is the very question which is incapable of resolution on this application. I certainly am not persuaded that they can be rejected at this stage as fanciful.

Mr McQuater pointed to the fact that Mr Holyoake and his company settled any claims they may have had in 2013 and went so far as to say that in the light of that settlement agreement there was not even a serious issue to be tried. Mr Holyoake's case is that he was still facing threats from the Defendants until they had been fully paid off everything that they demanded. If Mr Holyoake is right, it does not seem, at this early stage of the case, at all impossible that that purported settlement, itself said to have been extracted by illegitimate threats, is not an answer to the claim.

If I ask myself, having regard to what is asserted in the Particulars of Claim and to what is said in the Defence, whether this is a claim that at this stage is more than barely capable of serious argument although not necessarily one which I believe to have more than 50% chance of success, the answer is Yes. For this purpose it is not necessary to rely on the allegations made by Mr Logue in a claim he brought against the Defendants (a claim which I am told has since been settled) although I do not accept Mr McQuater's characterisation of this as of no value; it is true that Mr Logue's allegations are just that, but is it notable that Mr Logue, apparently entirely independently of Mr Holyoake, accused the Defendants of conduct that, although naturally differing in its detail, was quite similar in its overall thrust, namely that the Defendants engaged in threats and other unjustified behaviour in order to secure a commercial advantage in relation to properties in which Mr Logue was interested. I am satisfied therefore that a good arguable case within the meaning I have said that I would apply is here made out by the Claimants.

Risk of Dissipation

The next question is whether the Claimants have demonstrated a risk of dissipation. There was no significant dispute about the principles. I was referred by Mr McQuater to a report of O'Regan v Iambic Productions Ltd [1989] 139 NLJ 1378 where Sir Peter Pain said:

"There are numerous paragraphs in the authorities relating to Mareva injunctions which make it plain that unsupported statements and expressions of fear carry very little, if any weight. The Court needs to act on objective facts from which the Court can infer that the Defendant is likely to move assets abroad or dissipate them within the jurisdiction."

I certainly accept that: a freezing injunction is a type of what used to be called "quia timet" injunctions, and it is well established that a claimant cannot obtain such an injunction simply by saying "timeo" or "I fear". On the other hand what one is looking for is a risk of dissipation; at this stage it is not unusual for a claimant to be unable to prove that dissipation either has happened or will happen, but only that there are objective facts from which such a risk can be inferred.

Mr McQuater also referred me to Mobil Cerro Negro Ltd v Petroleos de Venezuela SA [2008] EWHC 532 (Comm) where Timothy Walker J set out various principles in relation to dissipation at [35]-[43]. I will not set it all out but the principles he referred to include the following:

(1) Freezing orders are not granted in order to provide security for a claim [36];

(2) The risk of dissipation must involve a risk of impairing the Claimant's ability to enforce a judgment or award [37];

(3) The conduct in question must be unjustifiable [41];

(4) It follows that mere reorganisation of the way in which business was done is not by itself evidence of dissipation [42].

Again I accept these statements of principle.

I propose to consider these matters under the following heads:

(1) The corporate structure of the Defendants.

(2) The nature of the Defendants' assets.

(3) Mr Christian Candy's interest in a property in Regent's Park.

(4) Mr Nicholas Candy's purchase of a luxury yacht.

(5) The nature of the allegations in the proceedings.

(6) The Defendants' reaction to the proceedings.

(1) Corporate Structure

It is common ground that the Candy brothers have been open in media sources about their use of offshore structures since about 2008. The Claimants commissioned a report from S-RM Intelligence and Risk Consulting Ltd into publicly available information as to the entities owned by the Candy brothers, and the result of that was put before me in the form of a witness statement from a Ms Victoria Brudenell of S-RM. She exhibited a corporate structure diagram, or organogram, which demonstrates the information that she was able to obtain from corporate filings. This shows a very large number of companies (some 140 in all) which can be put together in three broad classifications: (1) the CPC group, which holds the property development businesses; (2) the Candy and Candy group, which encompasses interior design and consultancy businesses; and (3) the Omni group which is responsible for the provision of capital and retail finance for the wider groups' activities. A large number of companies are incorporated offshore including CPC (the Sixth Defendant), which was incorporated in Guernsey as are many of its subsidiaries, and as is CPC Omni Holdings (Guernsey) Ltd, the holding company of the Omni group; Candy and Candy Group Ltd is incorporated in the BVI. The organogram also shows extensive use of nominee companies, CPC being held by two nominee companies, Cosign Nominees Ltd and Spread Nominees Ltd. They are also shown (although these shareholdings are said to be unconfirmed) as holding CPC Omni Holdings (Guernsey) Ltd and a large number of other Guernsey companies. It appears that those nominee companies hold their shareholdings as fiduciary for another Guernsey company called Intertrust Group Holdings (Guernsey) Ltd and Ms Brudenell's diagram suggests that Intertrust holds its assets as nominee for Mr Christian Candy. Again however this is unconfirmed although she cites accounts for one subsidiary of CPC which refers to the ultimate parent company of CPC being under the control of Mr Christian Candy, described as "the majority shareholder". That can be contrasted with what Mr Andrew Smith, a partner in the solicitors for the Defendants, now called Gowling WLG, says in his witness statement in opposition to this application, which is that CPC is "wholly owned" by Mr Christian Candy. Ms Brudenell's witness statement also reveals that there had been a large number of companies either dissolved or formed in a short period. Her evidence is that approximately 30 group companies were dissolved between 2014 and 2016 and more than 50 companies were incorporated in Guernsey and the UK between 2014 and 2015. Ms Brudenell's witness statement also shows that Candy & Candy Holdings Ltd, a company owned by Mr Nicholas Candy, acquired in 2014 four companies from elsewhere in the group structure and put them into liquidation on the same day having received over £1m from these companies in advance of their winding up.

On these facts Mr Trace's submissions were as follows. The structure that is revealed by the organogram is an unusually complex one and it is a particularly opaque one. Mr Stringfellow, a partner in the firm gunnercooke LLP, the Claimants' solicitors, described it as "labyrinthian" and says that although he has seen many group structures in 20 years of practice he has never seen anything as elaborate or complex as this one. Mr Trace said it has taken a lot of work even to get to the stage that Ms Brudenell has been able to get to, that the Claimants could not know if there had been changes since then, and that it was difficult to know where the value resided in the structure. He said that it lent itself to moving assets around without leaving any trace. He referred to the fact that a great many of the companies are incorporated offshore, the important point here being that the jurisdictions selected by the Defendants as a basis for substantial parts of their businesses impose very limited reporting requirements on companies. The evidence is that in Guernsey there is no requirement for companies to file annual accounts; Ms Brudenell also says that her enquiries with the Guernsey register confirmed that since 2008 Guernsey-incorporated companies have not been required to file information about shareholders. Mr Trace also refers to the extensive use of companies as nominees and fiduciary agents, the effect of this being to obscure the ownership structures of companies in the groups and to make it easy for the Defendants to switch the beneficial ownership of companies, and hence of the underlying assets, simply by giving instructions to the nominee or fiduciary companies, such changes being invisible in the public record. Mr Trace also refers to the corporate structure having apparently no "topco". That means that it is not possible to trace value up to a single entity. Indeed he says that the set up of three or more simultaneous corporate structures makes it easy to move assets around between groups and hence away from CPC. He also points to the extensive corporate restructurings which Ms Brudenell has uncovered; this illustrates that with a structure of this type it is possible to move assets around at short notice thereby making it more difficult for the Claimants to enforce any judgment that they might obtain.

Mr McQuater says that the use of offshore structures is not in itself something that can be regarded as giving rise to a risk of dissipation. He points to the fact that Hotblack (the Second Claimant) is itself incorporated in Jersey and is held by Mr Holyoake through at least two BVI companies. Mr McQuater said that the mere use of offshore corporate structures was not something that implied a risk of dissipation since that was commonplace and legitimate for international businessmen; it would be different where there was a good arguable case that a person used a web of offshore structures to facilitate a fraud: see VTB Capital plc v Nutritrek International Corp [2011] EWHC 3107 (Ch), [2012] EWCA Civ 808 where at first instance Arnold J had said (at [233]) that:

"It is not uncommon for international businessmen, and indeed quoted UK companies, to use offshore vehicles for their operations particularly for tax reasons. This may make it difficult to enforce a judgment. But in that respect claimants such as VTB have to take defendants such as Mr Malofeev as they find them. More is required before the court will conclude that there is a risk of dissipation."

The Court of Appeal's comment on that, at [174] of the judgment of the Court given by Lloyd LJ, was:

"It seems to us that, while that may be a fair comment as regards international businessmen generally, the factor of a good arguable case as to fraud against the person in question, and the use of a web of offshore companies in connection with the fraud, could properly provide a basis for taking this into account in favour of the grant of an injunction."

Mr McQuater said that in this case, although there were allegations of fraudulent misrepresentation against the Defendants, they were not the heart of the case which was an allegation of conspiracy and duress, and that it was not suggested that any fraud was facilitated by the use of a network of offshore companies. That seems to me to take the Court of Appeal's words as if they represented a definitive statement of when the use of offshore companies could be regarded as giving rise to a risk of dissipation, which is I think a misreading.

Mr McQuater pointed out that the Claimants' investigator was able to assemble a large amount of publicly available information about those companies within a couple of weeks. Although the number of companies owned indirectly, in particular by Mr Christian Candy, is very large, he described the corporate structure as in fact relatively simple, with everything ultimately owned by Mr Nicholas or Mr Christian Candy and the majority of the companies owned by Mr Christian Candy through CPC. He also said that a business reorganisation or change in the nature of business carried on does not by itself imply a risk of dissipation: see the Mobil case at [41]-[42]. The corporate reorganisation in 2014 to 2015 was not and could not be a dissipation of assets, the new companies all being owned by the existing Defendants. Nor did the fact that assets could be moved around the group prove anything, referring again to Mobil at [62], where Timothy Walker J said that the fact that funds could be easily transferred from one account to another and that shares in joint venture companies were easily transferable did not assist Mobil, there being nothing unusual about any of that. Mr McQuater said that the real complaint was that the Claimants could not see what assets the Defendants have got; he was not pretending that the Claimants could determine where the assets of the companies were but that was true of many companies and many individuals and did not prove anything. There was no suggestion of any fraud and it was not a legitimate complaint to say "I don't have visibility of your assets". He also referred to the fact that many of the newly incorporated companies were incorporated in England and Wales, that Mr Nicholas Candy lived in the UK, and that Mr Christian Candy, who had previously lived in Monaco, was now also living in the UK and tax resident and domiciled here. In other words the Defendants had strong, and strengthening, links with this jurisdiction.

I accept entirely that the mere fact that a defendant holds their assets or businesses, or some of them, offshore through offshore structures, is not in itself evidence of a risk of dissipation. I accept also that the mere fact that there are a large number of companies is not by itself anything unusual; it is common for businessmen involved in a number of separate projects to use special purpose vehicles for each project, and this in my experience is neither atypical nor surprising in the case of those involved in the acquisition and development of property. I accept also that a large amount of information as to the structure was publicly available such that the Claimants' investigator could put together the organogram in a relatively short time and without too great difficulty. But I do not think that any of this fully meets the points made by Mr Trace. Those who use offshore structures, especially complex structures involving nominees and fiduciaries, may do so for entirely proper and bona fide reasons, but the experience of those who practise and sit in these Courts is that such structures do lend themselves to being abused. It is notorious that the use of offshore trusts, and companies incorporated in jurisdictions which do not require detailed financial reporting, and the use of fiduciaries and nominees which enable the beneficial ownership of assets to be switched easily and without visibility, are aspects of a structure that enables those who wish to move assets around or to hide them to do so more easily. It is perfectly true that a claimant does not have any entitlement to know what a defendant's assets are before suing him; but the fact that the defendant uses complex and opaque offshore structures (and despite Mr McQuater's submissions, I am satisfied that this is an unusually complex structure) which make it difficult to see where value resides in a corporate structure, and which enable assets to be moved easily from one part of the structure to another, is a factor which in my judgment can legitimately be taken into account. I conclude therefore on this aspect that although the complex, opaque and offshore structure of the Defendants' companies is not in itself grounds for inferring a risk of dissipation, it is capable of being regarded as contributing to the risk if there is other material on which to infer such a risk. I do not therefore accept Mr McQuater's submission that unless the case can be brought within the type of case described by Lloyd LJ in VTB v Nutritrek, the existence of offshore companies can always be ignored as irrelevant.

So far as the corporate reorganisation is concerned, Mr Trace QC pointed to the fact that there had been a large number of companies dissolved and others incorporated since these proceedings were first intimated which was in May 2014, the suggestion being that the reorganisation might have had something to do with the threat of proceedings. Mr McQuater denied that that was a reasonable inference. As well as the fact, already referred to, that many of the newly incorporated companies were onshore, he referred me to the form which the May 2014 correspondence took. It starts with an e-mail on 2 May 2014 from Mr Holyoake to Mr Tim Dean of CPC requesting the appointment of an arbitrator and saying that if CPC had acted fairly then the arbitrator would no doubt "find in your favour" and "CPC should have nothing to hide or fear if as you say you have treated me properly and correctly". Mr Dean brushed off that suggestion. Mr Holyoake tried again with Mr Dean and when that did not work he e-mailed Mr Nicholas Candy directly, suggesting that the parties engage in an arbitration process and saying "if you guys are correct as you say then the arbitrator will rule in your favour and we will be bound by its findings". That led to a letter dated 6 May 2014 from the Defendants' solicitors, then called Wragge Lawrence Graham & Co LLP, to Mr Holyoake's solicitors in which they said they had been asked to write by "our clients CPC Group, Chris Candy and Nick Candy" and continued:

"Despite the issues between our respective clients being resolved with the benefit of legal representation from our respective firms, your client has taken to sending repeated emails to our clients. These emails suggest that the concluded matters are reopened by way of arbitration."

They then rejected the suggestion of arbitration and continued:

"In the event that your client wishes to pursue a claim of whatever nature he should do so by court proceedings. There is an exclusive jurisdiction clause citing the Courts of England and Wales. Our clients have nothing to hide."

Mr McQuater said that correspondence did not disclose a threat to bring proceedings against the Candy brothers personally but only against CPC; he also said that after Wragge's letter of 6 May nothing further was heard until December 2014. It was therefore not a reasonable inference that the reconstruction which took place late in 2014 was designed to avoid the impact of threatened proceedings.